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Revenue to Capital

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Revenue to Capital

Capital Expenditure using the School Budget Share (Revenue to Capital Transactions)

Any capital project first needs to be agreed with the Local Authority and DFCG (Devolved Formula Capital Grant) should be used to pay for the project before capitalising any surplus from the revenue budget

The DfE require schools to identify capital income and expenditure undertaken in school which is outside the Local Authority’s Capital Programme and separate from the Devolved Formula Capital Grant (DFCG). This is when schools choose to use part of their School Budget Share (known as the Revenue Budget) to undertake capital projects and/or the receipt of raised funds/donations towards such projects.

Scheme for Financing for Schools section 2.14 Capital spending for budget shares

An advantage of separating out capital projects is that schools will be able to interpret benchmarking data more accurately as schools capital projects will not be mixed within the premises running costs.

Non Capitalised spend

Expenditure for projects for smaller alterations and individual refurbishment projects up to the value £4k can be allocated within the revenue budget to GL221220 ‘Alterations & Improvements to buildings’ this covers expenditure relating from carpets and curtains to refurbishment.

Scheme for Financing for Schools section 12 and Annex C

Please note:

  • DFCG should be used first
  • Only a surplus balance in revenue can be used
  • There should never be a deficit on the capital balances at year end.

How to transfer from Revenue to Capital

Once a revenue amount has been capitalised it can’t be reversed if it is unspent so careful consideration should be taken before doing a journal (for actuals) or a revised ABL (for budget). It is recommended to wait until the project is completed or at year end to ensure the total cost of the project matches the amount to be capitalised.

If you wish to submit a revised ABL to show the changes to your budget please be aware of the revised ABL deadline.

Although there is a Capital balance c/fwd GL code 992434 this should only be used with permission as projects should be completed in the year. Please contact the Finance Service Desk if you have a capital project that will run into the following year.

Actual expenditure that has already been allocated to revenue codes.

If applicable Actual expenditure has already been allocated to revenue codes it will need to be journaled to capital codes using the journal Eform. If invoices have not yet been paid they can be allocated directly to capital expenditure codes.

To capitalise a revenue surplus

To ensure the capitalised revenue matches the expenditure in the year it is recommended the below journal and revised ABL (see applicable deadline) is actioned at year end or completion of the project.

Dr GL828500 (revenue) E30 Direct Revenue Financing of non LA capital (matching

CI04). This moves the amount out of revenue into capital

CR GL992418 (capital) C104 Direct Revenue Financing of capital (matching E30).This allocates the amount within capital.

These amounts should always match.

As the Capital budget will need to balance to zero the total amount credited to GL992418 and other capital income codes should equal the amount allocated to the capital expenditure codes.

Table of relevant Capital codes

CFR Code

SAP GL Code

Code Name

Contribution from Revenue Budget

E30

828500

Direct Revenue Financing of non LA capital (matching CI04)

CAPITAL INCOME AND EXPENDITURE CODES:

Capital Opening Balances

OB5

992424

Other Capital Balances – B/F (Deficit)

OB5

992428

Other Capital Balances – B/F (Surplus)

Capital Income

CI01

929080

Capital Receipts (Outside BCC Capital Programme)

CI03

927015

Donations for schools capital projects (from Internal Funds & PTA’s etc)

CI04

992418

Direct Revenue Financing of capital (matching E30)

Capital Expenditure

CE02

221227

CapitalBuilding Work (SBS)

CE02

221237

CapitalBuilding Work – Fees (SBS)

CE03

226001

Capital Fixtures and Fittings (SBS)

CE04

384151

Capital - IT Equipment (Hardware only)

Capital Closing Balance

BO5

992434

Other Capital Balances – C/F

Please see code list on schools web for full description Schools GL code list

Example

There are two steps to be taken to reflect the changes on both the budget & actuals, A journal for actuals and a revised ABL for budget.

A school has a classroom project which will cost £25k, which includes £18k  new IT equipment. They have a forecast revenue surplus c/fwd of £50k.

They will fund this from a £5k contribution from PTA which is a cheque that needs to paid into their school budget and £20k from their revenue surplus c/fwd of £50k.

They have already paid an invoice for IT equipment for £3k but it has been allocated to revenue code GL341003 (so will need to be journaled to a capital code).

Budget  ABL Eform

DR GL828500 (revenue) £20k

CR GL992418 (capital) £20k

CR GL927015 £5k (capital) PTA contribution (cheque to be paid in)

 

£25k must now be allocated to relevant expenditure codes.

GL226001 capital fixtures & fittings £7k

GL384151 capital IT equipment £18k

Actuals Journal Eform

DR GL828500 (revenue) £20k

CR GL992418 (capital) £20k

CR GL927015 £5k (capital) PTA contribution

 

DR GL226001 (capital) £7k

DR GL384151 (capital) £15k remaining invoices to be paid

DR GL384151 (capital) £3k

CR GL341003 (revenue) £3k

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